Types of Funds in India

Accounts play a key role in a country's economic management. The Consolidated Fund of India (Article 266), the Contingency Fund of India (Article 267), and the Public Accounts of India (Article 266(2)) are the three different forms of central government finances that are mentioned in the Indian Constitution.

What is Government Fund?

Government financing is a formal donation made by a federal, state, or local government body in honor of a noble effort.

• In essence, it serves as a transfer payment. Grants do not include technical help or other types of financial aid like loans, loan guarantees, discounted interest rates, direct appropriations, or revenue sharing.

• In some cases, such as when a discovery results in a patent that brings in money, there may also be revenue-sharing agreements with the government.

• Government funding refers to any circumstance in which a business or initiative receives all or some of its financial support from a government.

• The government does more than just give these organizations money, though.

• A company that has been awarded a government contract for work usually subcontracts out a portion of the work to other businesses.

• For the purposes of the specific subcontract, these businesses are regarded as beneficiaries of government funding and, as such, are governed by all laws and regulations that may be in force.

• Governments can also raise money through loans, which can be used to directly or indirectly subsidize borrowing from other sources.

• Normal loan terms call for interest on top of full payback. For higher education, government loans, particularly those from the federal government, are frequently utilized.

• Frequently, until the beneficiary completes their education, interest charges and repayment requirements are put off. Small business finance is another traditional category of government credit and is normally managed by the Small Business Administration.

The Indian government's finances are separated into three categories, which are listed below −

Consolidated Fund

The most crucial account in the government is the Consolidated Fund of India. Except for extraordinary items, the government's receipts and expenditures are included in the consolidated fund.

As stated in Article 266 (1) of the Indian Constitution, this fund was established. The Consolidated Fund of India is the repository for all of the government's direct and indirect tax collections, as well as borrowing costs and repayments of government loans.

Except for unusual expenses, which are covered by the contingency fund or the public account, all government spending comes from this fund. A crucial restriction is that the parliament must approve all withdrawals from this fund.

It is divided into the following five sections −

• Charges for expenses made against consolidated funds

• Income account (receipts)

• Revenue account (disbursements)

• Capital statement (receipts)

• Capital statement (disbursements)

Charged Expenditures on Consolidated Fund

Non-votable means that no vote is required to approve expenditures charged to the Consolidated Fund of India. These costs should be covered by the range of pay and allowances for −

• The Chief Executive

• A speaker

• The Lok Sabha's deputy speaker

• Judges of the Supreme Court's salaries and benefits

• Judges of the Supreme Court and tribunals' pensions

Contingency Fund

The Indian Constitution's Article 267(1) makes provision for this fund.

• It has a 500 crore rupee corpus. It has the characteristics of an impress (money maintained for a specific purpose).

• On behalf of the Indian President, the Secretary of the Finance Ministry is in charge of this fund.

• Unexpected or unforeseen expenses are covered by this fund.Article 267 permits each state to establish its own contingency fund.

Public Account of India

Article 266(2) of the Constitution establishes the following: The Public Account of India should be the source of all additional public funds received by or on behalf of the Indian government (except for those that are attributed to the Consolidated Fund of India). The following ingredients go towards making this −

• Bank savings accounts are available for several ministries and departments.

• The national defense fund is comparable to a modest national savings pool.

• National Savings and Investments Corp. (money obtained from disinvestment)

• The National Catastrophe and Contingency Fund is known as NCCF (for disaster management).

• Insurance for communications, provident funds, and other things.

Conclusion

The Indian Parliament must approve both the expenditure and the withdrawal of the corresponding amount from the Consolidated Fund in order to maintain the Contingency Fund's corpus. Similar to this, every government creates a contingency fund in accordance with Article 267(2) of the Constitution. Article 266 of the Indian Constitution establishes the Public Accounts (2).

Frequently Asked Questions

Q1. Who controls government money in India?

Ans. The highest governing body is the Ministry of Finance.

Q2. Who is the owner of the India Contingency Fund?

Ans. The Fund is held on behalf of the Indian President by the Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs.

Q3. Who gets salary from Consolidated Fund of India?

Ans. The President's salary and benefits, the Speaker and Deputy Speaker of the Lok Sabha, the Chairman and Vice Chairman of the Rajya Sabha, Judges of the Supreme Court and High Court get salaries and allowances, while CAG and Lok Pal justices receive salaries and allowances as well.

Q4. Who prepares the budget in India?

Ans. The budget is created by the Ministry of Finance.